Mar 20, 2011

Lindsay Lohan's confidence is starting to wane -- sources close to LiLo tell us she is finally getting it through her head she can't avoid jail and is now "seriously considering" taking a plea deal.

As TMZ first reported, Judge Keith Schwartz offered LiLo and her attorney Shawn Holley a deal that includes three months in jail ... which get whittled down to 19 days because of jail overcrowding.

Lindsay has been adamant for weeks ... she would never take a plea deal because she feels she did nothing wrong. Sources close to Lindsay tell us she still maintains her innocence ... but reality is starting to sink in and Lindsay is beginning to understand the risks of going forward with a trial.

If she loses at trial, she could get more than a year in jail for the probation violation ... plus prison time for the felony grand theft.

If Lindsay accepts the deal, Holley must tell the judge on Wednesday. Lindsay will be back in court Friday to either take a plea or declare war. Source